Should the US bail out US auto manufacturers?

[Neo]

FWIW, GM did jumpstart the US economy after 9/11 with their 'Keep America Rolling' campaign, with its 0% loans. I think that really helped out a lot at a bad time. Maybe its time for the US to return the favor by helping out a little.

I'm not sure if they were really helping out the US...in appearance they were, but the nuts and bolts of it may have a different story to tell. I believe GM rolled out its 0% loans for the same reasons 0% loans can be had today for big trucks and gas guzzling cars. The stock of GM after 9/11 was roughly the same as it was at the end of 2007...and it had been heading down hill for quite some time before that.

Auto makers are either blind or they knew full well that the condition they now find themselves in would happen eventually. The problem is that they let it happen:

[Charlotte_native]

The big 3 are dinosaurs. Any quality company is thinking ahead for business, not just in the present and especially not in the past. While auto makers across the world were building and perfecting fuel efficient and smaller cars for decades, we've been building larger and larger cars as if 1) gas was an infinite resource, and 2) we had access to all of what is there -- almost like right of first refusal. We never learned from shortage to shortage, or from being held hostage by OPEC a couple decades ago, that being firmly dependent upon fuel could strangle us. Now that fuel prices bounce up and down (doubling and halfing this year in just a couple of months) we are finally waking up to reality. And our auto makers have no plans for what should have been obvious. If they are that poorly managed, have that little insight into reality, and can't make it without help, they shouldn't be bailed out. Like a post says above, cars and their parts are built all over the world now -- how can you tell a true US car vs. a foreign car? I know Toyota has plants here in the US, I've heard, but don't know if its true, that Toyota employs more auto workers in America than any of the Big 3 do.

Thanks goodness a new Hummer Pick-Up was just introduced a couple months ago...for that reason and its symbolism, they should be forced to work better, smarter, or not survive if they can't.

[Charlotte_native]

There was a discussion on NPR yesterday about this -- I only caught part of it -- but part of the conversation was about new start-ups that are developing high fuel efficiency cars and electric cars. Something like 20 in the US right now. If any or all of the Big 3 fail, it isn't like we'll never produce cars again and this major shift in what consumers want and what energy issues are pushing us towards actually gives new firms and new ideas a chance. Propping up companies that have refused to change will eliminate the ability for this market reaction to happen as it would otherwise.

IF they get any of our money it should come with a mandate that they produce fuel efficient cars and shift thier research to solving energy problems -- not prolonging what is coming anyway.

[monsoon]

It should be noted that Diamler (parent of Mercedes-Benz) still owns 20% of Chrysler and still provides some technology to the company.

[Charlotteman]

Does anyone actually believe the American automobile industry will be alive in, say, 20 years?

It has been dying for decades, with occasional (and short-lived) periods of success. No one wants to see Detroit collapse. No one wants to see millions of people unemployed.....But is that it's unavoidable final fate?

We can't discount the idea that Americans no longer make the world's best cars. If Detroit made good cars, the auto industry would be flourishing. I haven't bought an American-made car since 1973. (And it was a piece of crap...constant alternator changes, new electric system, new batteries, always something)

[Charlotte_native]

We can't discount the idea that Americans no longer make the world's best cars. If Detroit made good cars, the auto industry would be flourishing. I haven't bought an American-made car since 1973. (And it was a piece of crap...constant alternator changes, new electric system, new batteries, always something)

[monsoon]

..... I haven't bought an American-made car since 1973. (And it was a piece of crap...constant alternator changes, new electric system, new batteries, always something)

[Charlotteman]

These are all excellent points...I've owned Toyotas for years, and it's obvious to me that it's a superior brand.

I'm always surprised to hear how well American cars sell in Europe and Asia. That always perplexed me---I'm glad it was brought up in this discussion.

[Charlotte_native]

I'm always surprised to hear how well American cars sell in Europe and Asia. That always perplexed me---I'm glad it was brought up in this discussion.

[Gusterfell]

Not exactly a fair test given that you are talking about 35 years ago. My other half recently owned a Tahoe and it operated flawlessly while he owned it. It was very smooth running, had the most comfortable seats that I have ever sat in in a vehicle, didn't require expensive maintenance nor premium gasoline. It was used to pull a 5000 lb boat which it did without complaint or effort. I have nothing bad to say about it.

Detroit has world class engineers and manufacturing and can build cars that compare to any in the world. What they lack is a competent management that is willing to take advantage of it.

[Gard]

I second this. I've had my PT Cruiser for over four years now, and have put over 60k miles on top of the 20k it had when I bought it. It has been hit twice while parked, including once by a full-size tour bus (I live on a major but very narrow urban street). Despite all that, I've never had to take it to the shop for anything that could be blamed on shoddy engineering. In all respects it works as well as it did when I first drove it.

By coincidence, the three cars I've owned in my fifteen years as a driver have all been Chrysler products ('80-something Plymouth Reliant, '90 Dodge Daytona, and my current '02 PT Cruiser). The first two were pushing 200k miles before they started getting hard to maintain, and my current car seems on track to do the same. Reliability aside, I found all three cars to be comfortable and generally enjoyable (the K Car was spartan, but not unreasonably so for its price range). I can't necessarily speak for ford or GM, but based on my own experience, I wouldn't blame Chrysler's woes on an inferior product.

[FromCityToRural]

Now, I heard that the bailout is actually a loan, not a handout. In that light, I would be much more in favour of it than for a straight handout.

[Rural King]

Does anyone actually believe the American automobile industry will be alive in, say, 20 years?

It has been dying for decades, with occasional (and short-lived) periods of success. No one wants to see Detroit collapse. No one wants to see millions of people unemployed.....But is that it's unavoidable final fate?

We can't discount the idea that Americans no longer make the world's best cars. If Detroit made good cars, the auto industry would be flourishing. I haven't bought an American-made car since 1973. (And it was a piece of crap...constant alternator changes, new electric system, new batteries, always something)

[Spartan]

Nope. Let the free market do what it does best. If they can't compete, then tough crap. Shoulda run a better business. There was a time when America knew how to run a good business. I hope we haven't lost that talent completely.

[monsoon]

This article in Popular Mechanics lists the 10 cars that did almost irreversible damage to GM's reputation for an entire generation. In almost all the cases it was due to short sightedness of the management to make a quick buck and in the process they forever lost millions of customers. I think the article does a good job of summing up what went wrong with them since the 1970s. Unfortunately, even though they did eventually fix their quality and safety issues, it was the same kind of short sightedness that caused them to latch onto SUVs, & trucks and why they are not prepared for the market today.

[monsoon]

^At 65% total North American market share at the time the Vega came out, I don't think GM had any worries about going under. They were simply trying, badly, to address the market for the desire of smaller cars in the market that was mainly stared by the public's fascination with the VW Beetle. They had done this earlier in response by coming out with the disastrous Corvair (also had an air cooled rear engine. this car is what made Ralph Nader famous) The Vega was the next attempt at it.

The Vega was actually a fairly good looking car for the time and I remember looking at one thinking that I wouldn't mind owning it. It certainly had better looks than anything that Toyota, Nissan and Datsun were selling in 1970 which were often derided by the public as being ugly, underpowered and unsafe. Toyotas at the time were basically shrunken down versions of American cars which didn't work too well. My uncle had purchased a 1970 Toyota sedan that amazingly used the same 2 speed automatic that worked in a V8, but not so well in a 4 cyl. The car had two speeds, stopped and slow. Honda was known for motorcycles in those days and their vehicles seemed like a motorcycle turned into a car. If you look back at the early history of these brands in the USA, you will discover they almost considered leaving the market asseveral European makers eventually did. Opel, Renault, Fiat and Peugeot, once sold here, all all distant memories here now.

The Japanese did have two things going for them. First in 1973, Americans experienced their first gasoline crisis when OPEC embargoed oil shipments to the USA. Egypt & Syria (I believe) had attacked Israel and Israel soundly defeated those armies in just a few days with American assistance and technology. In response, the Arab countries cut off the oil which put the country into an immediate crisis. Gasoline not only doubled in price, but it could not be bought for days at any prices. This doomed the 8-15 mpg large cars of the day and people began looking for alternatives. The Japanese by then had revamped their cars and were all of a sudden were an overnight hit as some of their vehicles got 40+mpg.

The other problem, and one highlighted by cars like the Vega, was just dismal quality. Ford, GM, American Motors and Chrysler had 90% of the largest car market in the world and because of it, there was an arrogance that came to play where customer concerns were not much of a consideration. From their perspective, where else where they going to go to get a car. By that point their cars were plagued with reliability problems, quality defects, design failures, and value engineering. My dad owned a fairly new Ford that crashed at highway speed due to poor welds in the axle which caused it to break. He swore that he would never buy another Ford and bought imports for the next 35 years. (They did get a Jeep a few years ago) Their cars had also gotten just plain ugly. There are not many "classics" from the 70s that interest people today. An example

Furthermore the big 4 also were taking very hard stands against their workers so there was a lot of animosity between the line workers and management. Workers would get even by sabotaging vehicles as they were built on the the line. One of the more infamous examples was the act of placing a handfull of ball bearings in the floorpan before it was welded shut. The end result is that every time the owner would hit the brakes, they would hear these ball bearings rolling back and forth under their feet. This was done on expensive brands like Cadillac and Lincolns which would infuriate the owners who paid a premium for these cars.

All of these items started to turn a significant portion of people against Detroit. The Japanese filled a lot of that void because they were perceived to address these deficiencies which the big 4 refused to address until too late. In 1970 they owned 90% of the market. By the 1980s this was down to 50%, American Motors disappeared, Chrysler was begging the government for a big bailout and GM and Ford were entering a period where they were not sure what to do. Sill GM and Ford were not perceived to be too concerned about it. Gasoline got cheap again in the late 1980s and the big 3 had hit a gold mine selling the mini-Van (invented by Chrysler in 1980), off-roading trucks and the SUV. Of course this was looking at the moment and not the long picture. A picture where almost everyone agreed that oil would get expensive again.

The big 2 find themselves in the same position they had in the early 1970s except this time they only have about 25%-30% of the market and they have very serious competition which they didn't have in the 1970s. Almost without exception, the foreign brands build more technically advanced cars with higher quality and better looks (which I admit is subjective). Kia, Hyundai have the value market, Toyota and Honda have the mid-tier and premium market, and Lexus, Mercedes and BMW have the luxury/high end market. The only place that GM and Ford might still have an edge is with trucks and we all know the limit of that market now. Their biggest problem however is one of mind share which has taken them almost 4 decades to destroy. I am not sure what they can do to get it back in time to survive.

[suburban george3]

The Big 3 have 'lost their way' and let the sight of cold hard 'easy' cash in SUV's kill them. People thought they were doomed in the early 80's when the Japanese had gotten their act togethere and were starting to eat Detroit's lunch with better designed Accord's, Camry's, Cressidas, and Maximas. GM had a good showing with their A-bodied cars (Chevy Celebrity, Pontiac 6000, Buick Century, Oldsmobile Cutlass Cierra) from '82-96. However, that also shows how little effort was put into the cars, 14 years on the same platform with mainly cosmetic changes from year to year. Also during that time, GM had the successful H platform cars (Pontiac Bonneville, Buick LeSabre, Oldsmobile 88.) But soon after, the SUV mania hit, and everyone started building Trucks and SUV's.

Ford had extreme success in cars too, with the well received '86 Taurus/Sable. But they to ceded the auto market to the Japanese.

The last best platform to make a run a high sales volumes would have been the Chrysler LH platform(Chrysler 300M, Concord, LHS, Dodge Intrepid, Eagle Vision), which brought Chrysler back from the brink of bankruptcy in the early 90's.

They all three went to where the money was without regard for the future and now they are paying for it. While I support some kind of package, I feel Washington should demand major massive overhauls in how Detroit does business and what type of vehicles they sell. Maybe they should make them quit selling vehicles with MPG below a certain threshold or destroy plans and molds for gas guzzling engines/components.

[tamias6]

So let's change tacks here a bit - what cars would you like to see the Big 3 sell in the US?

[Charlotte_native]

1. Make all passenger vehicles, including cars, trucks, vans, SUV's, and x-overs have mpg's no less than 25 city, 30 highway.

2. Make all vehicles flex fuel and or hybrids

3. Simplify the technologies used so that owners can easily maintain and repair vehicles themselves. (Would save allot by not having to pay mechanics fees)

4. Use of standardized parts to lower the cost of purchasing parts needed to repair and maintain vehicles. Paying 60 dallars or more for a headlight assembly or 250 dollars for a mirror just because they are proprietary parts is ridiculous.

5. I seriously doubt that our roads will ever be in good shape for a long time to come so ruggedness and quality must be paramount.

6. Produce cost effective vehicles. There is no reason why one should have to fork over 30 to 60 grand for a new vehicle esp. in today's economy. Kia is able to make great vehicles for 10 -15 grand. Set the bar there.

Over all a great vehicle to me is one that can conformably seat four to six adults, haul a week's worth of groceries, and have enough power to tow about 5000 pounds (the weight of our camper) and get good gas mileage. It would be easy and not too costly to maintain and fix while getting us from point A to point B in relative safety and comfort. All of this to be had without costing an arm and a leg. With the technologies available to the automakers this surely is not too much to ask.

[Gard]

Part of GMs plan is out now...

They plan to sell Pontiac, Saturn and Saab.

[monsoon]

Part of GMs plan is out now...

They plan to sell Pontiac, Saturn and Saab.

[kayman]

I'm still pissed at the way GM has done the Saturn brand!

[tamias6]

If I had my way with GM, I would get rid of allot the brands they have and then reorganize what is left into the following.

GMC- pickup trucks, vans, and SUV's

Chevrolet- Midrange cars, minivans, muscle cars, X-overs

Saturn-Economy Cars and X-overs

Cadillac-High end sedans, X-overs, and SUV's

[Gard]

I thought I heard they were going to close these 3 down along with Hummer. I can't imagine there is anyone around to buy them as the bulk of cars produced by these divisions are all on GM's common platforms. They really don't have any unique models anymore. Also, I can't imagine that GM would let a company such as Toyota own a marque like Pontiac. This is a good start for them, but doesn't go far enough. I think they also need to off Buick.

My guess is they are going to ask congress to let them out of dealer franchise agreements without penalty.

[suburban george3]

Peugeots sell well in Europe, I wonder how they would do in the US. This might give them a way to find out.